Stocks gain with earnings as Fed looms, oil advances

BLOOMBERG

Global stocks climbed for the first time in four days amid earnings reports in Europe and America that topped estimates. The yen strengthened a second day ahead of central bank decisions from Japan and the U.S.
The Standard & Poor’s 500 Index climbed and banks led European shares higher after a three-day slump. The yen rose and Treasuries ended a six-day decline as a report showed orders for U.S. durable goods rose less than forecast in March. Copper fell for a second day and crude oil traded at about $43 a barrel in New York. The pound strengthened against all of its major counterparts.
While earnings set the tone on equity markets, trading volumes were light as investors await policy decisions from the Federal Reserve and Bank of Japan. The nine-week rally in global equities that erased the worst start to a year on record has faltered in the face of uncertainty over the path of U.S. interest rates and persistent signs of sluggish growth in the global economy. Corporate results have done little to alter perceptions on the strength of the economy
“The S&P 500 is at what I consider to be a key resistance area in that 2,090 range, so it’s going to take some good news to push through that,” said Alan Gayle, a senior strategist at Atlanta-based RidgeWorth Investments, which has about $37 billion in assets. “The FOMC starts its deliberations now and so it would appear at this critical positioning in the market near resistance that traders may be just waiting on the sidelines until the FOMC is done before making any real bets.”
The Federal Reserve concludes its meeting Wednesday, with investors pricing in no chance of an interest-rate increase. The Bank of Japan’s outcome is a day later and most analysts predict Governor Haruhiko Kuroda will unveil a stimulus boost. In the U.S., Apple Inc. releases results Tuesday that may shed more light on the state of the technology sector.

Stocks
The Stoxx Europe 600 Index rose 0.2 percent as of 9:31 a.m. New York time. Standard Chartered jumped 12 percent in London after the bank reported a decline in loan impairments and capital increased more than some analysts estimated.
BP, the first oil major to report quarterly earnings, rallied after posting a surprise profit as a stronger-than-expected refining and trading performance helped mitigate the lowest crude prices in more than a decade.
The MSCI Emerging Markets Index rebounded 0.4 percent, after losing 0.4 percent, as stocks in China, India and South Korea advanced. The Hang Seng China Enterprises Index of mainland shares in Hong Kong rose 0.3 percent after sliding 1.4 percent. The Shanghai Composite Index added 0.6 percent, rebounding from the lowest since March.
Saudi Arabia’s Tadawul All Share Index dropped 1.6 percent after climbing 2.5 percent Monday, the most in seven weeks on Monday after the kingdom announced a plan to prepare for a post-oil era that won’t depend on excessive government spending.

Currencies
The pound strengthened rose 0.4 percent to 77.47 pence per euro, after touching the strongest level since March 14. A measure of risks to sterling following the June 23 vote on EU membership has tumbled by the most since last year’s general election.
The ringgit slid 0.6 percent. 1Malaysia Development Bhd. said it didn’t pay $50 million of interest on a $1.75 billion bond amid a dispute with Abu Dhabi’s sovereign wealth fund on who should be making the payment. The latter is the co-guarantor of the defaulted securities and said this month 1MDB owed it more than $1 billion. 1MDB’s dollar bonds slumped, sending $3 billion of March 2023 securities down 1.76 cents to 88.37 cents on the dollar to yield 6.53 percent .
The yen strengthened 0.2 percent to 110.88 per dollar, having touched a three-week low of 111.91 on Monday. Nikkei newspaper reported that Japan’s $1.3 trillion Government Pension Investment Fund will start hedging to protect its foreign assets against an appreciating yen, a move Bank of America Merrill Lynch strategist Shusuke Yamada said could boost the local currency.
New Zealand’s dollar climbed 0.5 percent to 68.90 U.S. cents after a group of academics, business people and economists said the Reserve Bank of New Zealand should hold its key rate at 2.25 percent when it meets on Thursday. Three of 16 economists surveyed by Bloomberg forecast the RBNZ will lower borrowing costs.

Commodities
Copper dropped 1.1 percent in London. Stockpiles in London Metal Exchange-tracked warehouses rose for a fifth day and are up 5.4 percent in the past week, a sign that supplies may be becoming more ample. Nickel fell 0.6 percent and lead slid 0.7 percent.
West Texas Intermediate crude rose 1.5 percent to $43.26 a barrel, after falling on Monday for the first time in a week. U.S. crude stockpiles probably expanded by 1.5 million barrels last week, according to a Bloomberg survey before Energy Information Administration data on Wednesday. Oil markets are signaling that prices have bottomed, even as growth in demand is forecast to slow this year, according to a senior executive at Vitol Group, an energy trader.
Gold declined as traders awaited clearer signals on the path of U.S. interest rate increases from the Fed. The metal lost 0.3 percent to $1,234.32 an ounce, according to Bloomberg generic pricing. Silver fell 0.4 percent to $16.93 an ounce.
“No rate hike this week would be positive but since this eventuality is already widely anticipated, according to the fed futures, any support for bullion may be limited,” James Steel, an analyst at HSBC Securities (USA) Inc., said in a report. “The BOJ meeting later in the week may impact gold if its decisions notably impact the yen.”
U.K. gas for day-ahead delivery climbed 3.8 percent to 32.85 pence a therm as a cold blast swept across Europe, boosting heating demand. “The latest weather models for the U.K. are pointing to temperatures remaining significantly colder than normal up until at least” May 3, Energy Aspects said in e-mailed note.
The price of European carbon permits jumped as much as 6 percent after newspaper Les Echos reported that French President Francois Hollande said the nation would commit to a carbon floor price this year. Power prices for 2018 and 2019 posted record increases after the president said Electricite de France SA would announce closures of some nuclear reactors from 2018 starting with its Fessenheim plant.

Bonds
Treasuries were little changed with the 10-year yield at 1.90 percent. Monday’s closing level was the highest this month, underscoring speculation that the Fed will keep its outlook for gradual rate increases.
While futures show there’s no chance of a move this week, traders have boosted the probability of a rate increase in 2016 to 64 percent from 49 percent last week.
The U.S. is scheduled to sell $34 billion of five-year debt Tuesday and plans to auction seven-year notes and two-year floating-rate securities on April 28.
Italian 10-year bond yields reached the highest since February as the nation sold inflation-linked bonds.